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TMI Blog2018 (11) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... rossly erred in not following the judgment of Hon'ble Jurisdictional High Court passed on 11.08.2015 in assessee's own case for assessment year 2009-10 in DB Income Tax Appeal No.54/2015 wherein the Hon'ble Court dismissed the departmental appeal and maintained the order of Income tax Appellate Tribunal dated 05.11.2014 allowing deduction u/s. 80G of the I.T. Act to the assessee. 3. That sustaining by the learned Commissioner (Appeals) of disallowance of deduction claimed by the assesses u/s. 80G of the I.T. Act and consequential addition of Rs. 1,27,67,676/- made by the AO to the returned total income and thereby sustaining levy of additional tax and charging of interest thereon under different sections consequent to such additions is unjust and in the alternative excessive. 4. That on the facts and circumstances of the case and under the law upholding by the learned Commissioner (Appeals) of the disallowance of Rs. 36,00,008/- made by the AO u/s.40(a)(ia) of the I.T. Act and consequently adding the same in the total income of assessee is most arbitrary, unjust and in the alternative excessive." 2. Ground Nos. 1 to 3 of assessee's appeal effectively relates to dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into account and it was not necessary that the donation must be in cash. As against the said view, some other High Courts does not contemplate any donation in kind instead the expression 'sum' relates to the cash amount of money which may have been donated by the assessee. The Hon'ble Supreme Court after considering the conflicting views of the various High Courts held that "Section 80G(2)(a) contemplates only cash amount of money as donation, for claiming relief of deduction and it does not refer to any donation made in kind". It was further held by the Hon'ble Supreme Court that after insertion of the aforesaid explanation, there cannot be any doubt that for purposes of claiming deduction, only cash amounts which may have been donated would be taken into account. The ld. CIT(A) further referred to the decision of Hon'ble Rajasthan High Court in case of CIT vs. Gaj Singh reported in 211 ITR 785 which has followed the above decision of the Hon'ble Supreme Court. Further, the ld. CIT(A) referred to the decision of Hon'ble Punjab and Haryana High Court in case of Nahar Spinning Mills vs. CIT reported in 49 taxmann.com 565 wherein donation by way of clothes sent to Prime Minist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent of the Hospital. As such the fact remains is that medical equipments are directly sent to hospital authorities and installation is also made by the suppliers but the invoice is issued by supplier in the name of the company. This is evident from the various papers/documents filed by the AO. Therefore, only because invoices are raised by the supplier in the name of the assessee would not make any difference particularly when all other correspondences by the supplier is with Medical Superintendent of the hospitals. All these facts show that the transaction in substance is a money transaction and the donation is virtually a donation in cash. 4. That the learned AO failed to consider that the assessee donor is not the manufacturer of the medical equipments which were installed in the above mentioned government owned Hospitals in Jaipur. The factual position is that at the instance of Hospital authorities, the money for purchase of the equipments/items for both the hospitals was paid by the appellant assessee to the manufacturers of those machines by way of account payee cheques. Meaning thereby what the appellant assessee donated was money i.e. cash and not donation in kind. Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect supervision of the medical superintendent and at no stage assessee comes into picture nor has he any say in the supply of the equipments and installation thereof. In other words it can be said that so far as assessee is concerned it has paid the donation in money i.e. by way of issuing cheque from his bank account in favour of suppliers of medical equipments and in such a situation by no canon of law, can it be said that donation is in kind or nor in cash. 7. That both the lower authorities failed to appreciate that Explanation-5 of Section 80G do not mandate that the payment should be made directly to the donee. The assessee had made payments by cheque to suppliers of equipments/items and goods were supplied/installed at SMS Hospital as well as Sir Padampat Matri Avam Shishu Swasthya Sansthan(S.P.M.C.H.I) JLN Marg, Jaipur. The assessee filed two Certificates both dated 17.08.2013 of Medical Superintendent Sir Padampat Matri Avam Shishu Swasthya Sansthan(S.P.M.C.H.I) JLN Marg, Jaipur and Chief Accounts Officer, SMS Hospital Jaipur regarding receipt of the equipments/items. On similar facts, the ITAT Jaipur Bench in assessment year 2009-10, in assessee's own case, in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substance of the transaction reveals that what is donated is a sum of money and therefore the rebate must be granted to the assessee. Again in case of CIT Vs. Amonbolu Rajiah 102 ITR 403 (AP) where the assessee agreed to donate necessary funds for construction of school building for Zila Parishad and advanced various amounts from time to time to the contractor for the purpose of construction of school building on a site belonging to Zila Parishad it was held that arrangement itself indicates that the intention was to donate the money earmarked for the purpose of constructing a school building and therefore the Tribunal is right in reaching the conclusion that it was a donation of money and not in kind and once it is found that it was a donation of a sum of money the case would squarely fall u/s.88 of the Income Tax Act (now section 80G). In case of Saurashtra Cement and Chemical Industries Ltd. Vs. CIT 123 ITR 669, the assessee donated cement bags manufactured by it and it was held that transaction in substance was a money transaction and the donation was virtually a donation in cash. 10. One such issue came before the Hon'ble Gujarat High Court in the case of CIT Vs. Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make available equipment without going to the technical formalities of the State Government for purchasing the equipments, had made available these equipments directly. It has been certified by the Medical Superintendent of M/s. Rajasthan Medical Relief Society, S.M.S. Hospital, Jaipur, that the appellant had made payment on behalf of the society. The learned AR relied upon the decision in the case of Saurashtra Cement and Chemical Industries Ltd. Vs. CIT and CIT Vs. Smt. Dhirja Ben R. Amin (supra) are squarely applicable in this case of the assessee. 13. That the above mentioned issue of deduction u/s.80G of the I.T. Act also arose in assessee's case for assessment year 2009-10 i.e. for the previous year ended on 31.3.2009. In assessment year 2009- 10 the appellant company filed its return of income for AY 2009-10 on 30.9.2009 declaring total income of Rs. 68,77,320/-. The assessing officer after scrutinizing the case u/s.143(3) of the Income tax Act, 1961 and after examining the books of accounts of the assessee allowed the assessee's claim of deduction u/s.80G of the Income tax Act as claimed by the appellant company. Subsequently, Commissioner of Income tax by taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to submit that a decision of a High Court would have binding course in the state in which the court has jurisdiction, but not outside that state. Decisions of the High Court are binding on the subordinate courts, authorities and Tribunal situated within its jurisdictional territory. 16. That the disallowance of deduction u/s.80G of the I.T. Act at Rs. 1,27,67,676/- made by the AO is highly unjustified and assessee craves leave to make following respectful submissions before your honour in above regard: (a) That the learned AO failed to appreciate that the judgment passed by the Hon'ble Rajasthan High Court which is a jurisdictional High court with regard to the assessment year 2009-10 under similar facts and circumstances in assessee's own case would be squarely applicable as judicial precedent on the assessment for assessment year 2013-14 in assessee's own case. (b) That the assessee craves leave to refer to 1st two lines of para 1 at page 4 of the impugned assessment order wherein the learned AO has clearly observed that the issue which was decided by the Hon'ble Rajasthan High Court in assessee's own case for the assessment year 2009-10 was similar to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon by the Revenue, has held as under: "4. The language used in section 80G(2)(a) is clear and unambiguous. On a plain reading of the section, it is apparent that an assessee is entitled to claim deduction from his income on the amount of money paid by him as donation to the authorities and for the causes specified therein. The use of the expression 'any sums paid' contemplates payment of an amount of money. One of the dictionary meanings of the expression 'sum' means any indefinite amount of money. The context in which the expression 'sums paid by the assessee' has been used makes the legislative intent clear that it refers to the amount of money paid by the assessee as donation. The Act provides for assessment of tax on the income derived by an assessee during the assessment year; the income relates to the amount of money earned or received by an assessee. Therefore, for purposes of claiming deduction from income-tax under section 80G(2)(a), the donation must be a sum of money paid by the assessee. The plain meaning of the words used in the section does not contemplate donations in kind. Donations may be made by supplying goods of various kinds inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be any doubt that, for purposes of claiming deduction, only cash amounts which may have been donated would be taken into account. No doubt this provision is not retrospective in nature; nonetheless it indicates the legislative intent behind section 80G(2)(a) even prior to its amendment. 8. We, therefore, agree with the view taken by the Kerala High Court. The appeal fails and is, accordingly, dismissed. There would be no order as to costs." 7. The ratio decidendi of the above judgement rendered by the Hon'ble Supreme Court will clearly applies to the case in hand. In the instant case, what is therefore relevant to determine is whether the assessee has donated money to Rajasthan Medicare Relief Society, SMS Hospital, Jaipur amounting to Rs. 31,23,590 and another donation of Rs. 96,44,086 to Rajasthan Medicare Relief Society, Sir Padampath Mother and Child Health Institute (S.P.M.C.H.I), Jaipur, or the said donation has been made in kind in form of medical equipments. 8. The question for consideration is therefore the determination of the finer distinction between the cash donation and donation in kind. In both the cases, there is outflow of money from the assessee's hand. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donor to the donee institution and which has been spent/transferred by the donor is the sum of money equivalent to the purchase price of the equipments purchased directly by the done insitution. The first scenario will not qualify for deduction as what has been donated is property in kind, however the second scenario will qualify for deduction as what has been spent and transferred is sum of money and not property in kind. In our view, the facts of the present scenario thus needs to be analysed in detail to determine which of the above scenarios it fits in and bases the same, whether the assessee is eligible for deduction under section 80G of the Act. 10. In the present case, the ld AR has contended that on the advise of the Hospital authorities, the assessee issued a cheque in favour of the manufacturers to directly supply the desired machinery and equipments to Hospitals. After getting the cheque from the assessee, the manufacturers directly sent the machinery and equipments to the Hospitals. The machinery and equipments sent by manufacturers were directly delivered to the hospital authorities and also got installed in the hospital premises. It was submitted that at no stage, eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be examined on facts prevailing in the impunged assessment year to determine whether the findings of the earlier years can be applied to the facts of the impunged assessment year. As we have noted above, there has been no findings recorded by the lower authorities regarding actual transaction details and documentation of the donation made by the assessee, we are unable to accede to the contention of the ld AR to blindly follow the findings of the Coordinate Benches in the earlier years. Similarly, reliance placed by the ld AR on the decision of the Hon'ble Rajasthan High Court doesn't support the case of the assessee as the said decision has been rendered in the peculiar facts and circumstances of the case in the context of exercise of powers by the ld CIT u/s 263 of the Act and apparently, the decision of the Honb'le Supreme Court in case of H.H. Sri Rama Verma (supra) was not brought to the notice of Hon'ble High Court. 12. In the entirety of facts and circumstances of the case and in light of above discussions and in particular, the decision of the Hon'ble Supreme Court in case of H.H. Sri Rama Verma (supra) referred supra, we set-aside the matter to the file of the AO to exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum but is not deemed to be an assessee in default under the first proviso to section 201(1), then, for the purpose of section 40(a)(ia), it shall be deemed that the assessee has (a) Deducted and (b) paid the tax on such sum On the date of furnishing of return of income by the resident payee referred to in the said proviso. With effect from 1st day of July 2012 following proviso has been brought on statute book in sec. 201 of the I.T. Act which reads as under: "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident shall not deemed to be an assessee in default in respect of such tax if such resident: (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed" Therefore, if the resident payee satisfies all the above 3 conditions and the deductor fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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